Dunelm Regulatory News (DNLM)

6 Jan 2009 07:00



6th January 2009

DUNELM GROUP PLC

TRADING UPDATE

Following the end of the 26 week trading period to 27th December 2008, the specialist out-of-town homewares retailer Dunelm Group plc ("Dunelm" or "the Company") today makes the following comments on trading.

Trading performance

The Company achieved the following sales result for the period: 

LFL sales performance consistently exceeded the British Retail Consortium's sales monitor for the home textiles sector. The Board therefore believes that the Company has continued to grow LFL market share, further underlining the appeal of Dunelm's value for money proposition in the current challenging economic conditions.

There was no unplanned or non-comparable pricing or promotional activity during the period, but the Company did respond to the consumer downturn by increasing the proportion of own-sourced promotional merchandise in stores. As a result, product gross margin over the 26 weeks is expected to have been approximately 

100 basis points higher than during the equivalent period last year. 

Operating costs have remained tightly controlled during the period, albeit that warehousing costs increased in line with the shift towards own-sourced products.

Store portfolio

During the period, new superstores opened successfully in Huddersfield, Newtownabbey and Plymouth. This brings the total number of superstores to 79, with the Board still committed to a medium term target of at least 150 superstores. 

A further seven units are legally committed and with the continuing low level of demand for retail warehousing, the Board is confident of being able to make good progress with the Company's opening programme over the next 12 to 18 months.  

Financial position

As at 27th December 2008, the Company had a positive net cash balance (after deducting borrowings) of £23.4m. Over the 26 week period, the average daily net cash balance was neutral.

Will Adderley, Chief Executive of Dunelm, commented:

"The last few months have been a period of huge turbulence in many retail markets and homewares has been no exception. We have seen a number of competitors exit the market as a result. In this context I believe that Dunelm's performance has been very solid. We have not resorted to unplanned promotional activity as a tactic to buy sales and instead have continued to offer our customers everyday fair prices and 'Simply Value for Money'. We have therefore preserved our margins and we believe that this, together with our exceptionally strong balance sheet, puts us in very robust shape to ride out the storm and to profit from the opportunities which it will inevitably throw up."

Dunelm will release its interim results on 26th February 2009. There will be a presentation for analysts at 9.30am in the offices of UBS, 1 Finsbury Avenue, London EC2M 2PP. Those analysts who wish to attend are requested to contact Natasha Jobling of Hogarth Partnership on the number below. A copy of the presentation will be made available on the Company's website.

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